A key industry body representing micro, small and medium enterprises (MSMEs) has advised members not to rush into opening their units as stringent punitive measures include an FIR against the CEO if a Covid-19 positive case is found on their premises.

Small industries in the country will face a shortage of raw material and labour as the graded lifting of the ongoing nationwide lockdown begins from Monday amid lack of clarity over whether entire supply chains will operate.

Finance minister Nirmala Sitharaman had on May 13 announced a new definition for MSMEs as part of the ₹20 lakh crore economic stimulus package. Besides a change in definition, she had announced a ₹3 lakh crore credit guarantee scheme to provide collateral-free loans to MSMEs.

Small units are facing a return of the inspector raj as local authorities have a great deal of discretion when interpreting powers to manage Covid-19. “Local authorities control whether or not to allow businesses to open – it is becoming a huge constraint,” said Anil Bhardwaj, secretary general, FISME.

Banks that do lend under schemes meant for SMEs, infrastructure that is woefully inadequate, regulations that are lopsided and a public sector that is ambivalent and unaccountable threaten to derail growth and sustainability for new companies.